My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following.
Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.
Can Stocks Outperform Cash or Bonds?
There is only one place I can think of that stocks have outperformed cash or bonds in a crisis…that is Zimbabwe. For those of you that do not know, Zimbabwe has experienced hyper inflation and their currency is basically worthless. Inflation in Zimbabwe reached 624 percent in early 2004.In 2006 the Govt of Zimbabwe’s began printing money and produced about 60 trillion Zimbabwean dollars. The rest is history. One of the richest countries in Africa in natural rescources basically imploded. Printing money always has…and always will lead to inflation.
Marc Faber came out with statements this week stating Inflation caused by the Federal Reserveג€™s various stimulas programs will cause stocks to outperform cash and bond investments. What he is saying in so many words is that the US dollar is in for extreme problems. Quoting Marc Faber, “The U.S. government and the Fed have spent, lent or committed more than $12 trillion to revive the economy and credit markets, a program which will have ג€dire consequencesג€ in the long term. Continuing on this tangent… Marc Faber continued by stating “The government ג€will print like never before,ג€ which will reduce foreign investments in the U.S. and weaken the dollar further”.
Well here we go again..Predictions as my colleague Charles just wrote about.
Everyone has predictions except trend followers… Even Robert R. Prechter and his Elliot Wave followers have a prediction on the US dollar. Robert Prechter believes the US dollar will rally. But you know what….the only that will be right…will be trend following commodity traders. If the US dollar roars upward..trend followers will benefit…and you know what..if the US dollar crashes…Trend followers will benefit as they did with the British Pound back in the early 1990s. Don’t predict… it can be costly to your pocket… React…Trend follow…
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Andrew Abraham
www.AJpartnersinc.com
Futures trading involves risk. People can and do lose
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